The 6 Month Rule For Flipping Houses
If it’s taking you longer than 6 months to flip a property, chances are you are not going to be profitable.
It doesn’t matter if you’re using hard money, a bank, or private money...all that capital works great if you have it out for a short period of time. When you are borrowing that money for a long period of time, your profit starts to decrease. If the project is taking longer than 6 months, it’s digging into your profits.
The same thing goes for construction costs, if your contractors are killing time and the project is several months in, they’re going over budget and time frames - it’s just not going to work. This also goes for holding costs, time is money - the longer it takes to complete a project, the less money you are going to make! Makes sense, right?
Keep in mind, markets change quickly. What your exit price or estimate resale value is today, may change tomorrow.. You want to make sure everything is in place. The rule of thumb is to execute and get those properties closed and flipped as quickly as possible!